APSN Banner

Breaking up is hard to do

Source
Jakarta Post Editorial - July 25, 2007

Some strange things emerged from the two massive labor demonstrations against American sportswear giant Nike the last two Mondays. The demonstrators reviled Nike with hate posters and slogans like "Go to Hell Nike" and "I Hate Nike", but at the same time they also pleaded with Nike to stay with them and give them jobs.

They went even further: if Nike does not want to renew the contracts with their factories, they demanded the company give them severance pay.

The problem is that these workers are not employed by Nike, but by PT Naga Sakti Parama Shoe Industry (Nasa) and PT Hardaya Aneka Shoe Industry (Hasi), which produce shoes exclusively for Nike. The two companies, controlled by businesswoman Siti Hartati Murdaya, recently received termination orders from Nike because of several problems, including below-standard product quality and untimely product delivery.

With no new orders coming from Nike, Nasa and Hasi will have no choice but to lay off their more than 14,000 workers. We sympathize with these workers because they need these jobs and the salaries to survive. However, it does not make sense for the workers to demand Nike give them severance pay since they are not employed by the US company.

Because of the strange nature of their demands, some people have concluded the two demonstrations against Nike have been more or less engineered by the two companies Nasa and Hasi.

In business, commerce must be done voluntarily, not by force or intimidation. Thus, the manner in which the two shoe manufacturers owned by Murdaya have asked Nike to stay or pay severance pay to the workers, by staging demonstrations, is too much. It will do no good, for the companies, the workers or the country.

It is understandable that Murdaya was shocked and disappointed by the termination of the orders from Nike. The businesswoman's two companies have been producing Nike shoes since 1989, meaning they have been working together for 18 years.

Problems emerged when one of the parties was accused of cheating, by directly selling the shoes both in the export and domestic markets, without going through Nike. From there, the trust was lost. Then other problems emerged, like below-par product quality and late deliveries. Nike then scaled down its orders from Nasa and Hasi by half to 300,000 pairs per annum, as a warning. Then the termination orders came.

The bottom line is that there is no more trust between Nike and Murdaya's companies. As in any relationship, breaking up is always hard to do, especially after 18 years together. It's harder for the party on the losing end, in this case Murdaya. But resorting to muscle power, like staging demonstrations, is not a solution. This will never restore the trust.

Many have called on the government to intervene. But the government must handle this issue with care because it concerns thousands of workers and a big foreign investor. Any mistake in handling the dispute could cause anger among the workers or scare away foreign investors.

So far, this problem has developed within acceptable corridors. The demonstrations have remained orderly, which is a relief. Similarly, Nike is still committed to Indonesia, shifting the orders from Nasa and Hasi not to overseas factories, but to one or two of its 30 other contractors in Indonesia. Nike says it is still committed to continuing to source 20 percent of its footwear from Indonesia.

Therefore, to prevent this issue from spiraling out of control, the government must act as a fair referee. Most of all, the government should prioritize the interests of the workers, to spare them from being unemployed. There are many alternatives available, and the government knows that. On top of that, the government must find a way to ensure the rights of the workers are protected, especially in terms of severance pay.

This Nike saga reminds us all, once again, of the importance of establishing an insurance system for severance pay that would protect the rights of workers and at the same time cater to the interests of investors, so that when there is a breakup, nobody gets hurt.

Country